Excelsior Medical Corporate Bonds and Leverage Analysis
| 4104 Stock | TWD 86.70 0.30 0.34% |
Excelsior Medical holds a debt-to-equity ratio of 0.074. . Excelsior Medical's financial risk is the risk to Excelsior Medical stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Excelsior Medical's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Excelsior Medical's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Excelsior Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Excelsior Medical's stakeholders.
For most companies, including Excelsior Medical, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Excelsior Medical Co, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Excelsior Medical's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Excelsior |
Given the importance of Excelsior Medical's capital structure, the first step in the capital decision process is for the management of Excelsior Medical to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Excelsior Medical Co to issue bonds at a reasonable cost.
Excelsior Medical Debt to Cash Allocation
Many companies such as Excelsior Medical, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Excelsior Medical Co has accumulated 705.38 M in total debt with debt to equity ratio (D/E) of 0.07, which may suggest the company is not taking enough advantage from borrowing. Excelsior Medical has a current ratio of 1.71, which is within standard range for the sector. Debt can assist Excelsior Medical until it has trouble settling it off, either with new capital or with free cash flow. So, Excelsior Medical's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Excelsior Medical sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Excelsior to invest in growth at high rates of return. When we think about Excelsior Medical's use of debt, we should always consider it together with cash and equity.Excelsior Medical Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Excelsior Medical's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Excelsior Medical, which in turn will lower the firm's financial flexibility.Excelsior Medical Corporate Bonds Issued
Understaning Excelsior Medical Use of Financial Leverage
Understanding the structure of Excelsior Medical's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Excelsior Medical's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Excelsior Medical Co., Ltd. distributes medical related systems in Taiwan, China, Japan, Korea, Malaysia, and the Philippines. The company was founded in 1988 and is based in New Taipei City, Taiwan. EXCELSIOR MEDICAL operates under Medical Devices classification in Taiwan and is traded on Taiwan Stock Exchange. Please read more on our technical analysis page.
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When running Excelsior Medical's price analysis, check to measure Excelsior Medical's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Excelsior Medical is operating at the current time. Most of Excelsior Medical's value examination focuses on studying past and present price action to predict the probability of Excelsior Medical's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Excelsior Medical's price. Additionally, you may evaluate how the addition of Excelsior Medical to your portfolios can decrease your overall portfolio volatility.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.